1 ACC/ACF3600 Auditing and Assurance – Semester 1, 2020 Audit Practice - Audit Risk Assessment (25%) Due Date: 4 PM, Monday, 25 May Learning Objectives “For some time, regulators have referred to a...

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1 ACC/ACF3600 Auditing and Assurance – Semester 1, 2020 Audit Practice - Audit Risk Assessment (25%) Due Date: 4 PM, Monday, 25 May Learning Objectives “For some time, regulators have referred to a lack of professional scepticism among auditors as a major issue in audit quality. Regulators argue that were auditors to be more sceptical, more misstatements in financial statements would be uncovered through the audit process. Despite increased awareness among auditors of the importance of professional scepticism in ensuring audit quality, regulators continue to refer to a lack of professional scepticism in their oversight reports.” (ACCA, 2017 p. 5). In this assignment, you will practice audit planning and risk assessment by applying the knowledge you learned in class to a real company. In addition, this assignment is designed to cultivate your professional scepticism and critical thinking. In the process of doing this assignment, you will also learn industry-wide knowledge of the targeted company and how to apply analytical procedures. As what auditors do in their working papers, you will learn how to justify and support your audit decisions with evidence. Targeted Company Please choose ONE of the following companies for your assignment. Your analysis should focus on the company you select, that is, do not cover all of the companies listed below. 1. Commonwealth Bank of Australia 2. Woolworths Group Ltd 3. Sonic Healthcare Ltd 4. Goodman Group 5. Telstra Corporation Ltd Tasks Assume that you are an auditor assigned to the audit of the company you choose and you are at the Risk Assessment Phase of the audit of 2020 Financial Report. You are required to complete the following audit planning tasks: (1) Provide a brief understanding of the entity and the industry. (2) Evaluate audit risk and going-concern risk. (3) Identify and justify two key audit matters. (4) Calculate the Planning Materiality for the 2020 audit. Explain and justify your assumptions, choices, and calculation. 2 (5) Identify two key accounts by analysing financial and non-financial information. Explain and justify your choices. (6) For each key account identified, identify one key assertion at risk of material misstatement. Explain and justify your decisions. Please search for related news, browse websites, read previous financial reports, read reports by journalists and analysts, collect information from different sources, and conduct empirical analyses. The 2020 annual report has not been released, so you need to rely on the financial and non-financial information available at this moment to do your analysis. Logical reasoning and corroborative evidence are critical in this assignment. 3 Instructions  You need to support your decisions by your own analysis and other evidence. Both financial information and non-financial information are important.  The assignment must include appropriate referencing, including relevant standards if applicable. Please ensure your work complies with the Q Manual requirements for structure, presentation and referencing. Information sources and references should be stated.  There is no need for a summary of your report, introduction or conclusion. If these are provided, we will not read nor mark these. Please simply answer the questions denoted above within the specified word limits.  No restriction on your style. However, the assignment submission has to be in an appropriate format and written well (i.e. logical as well as minimal grammar and syntax issues). Clear presentation and communication are expected.  Do not cut and paste from the financial reports or audit reports or academic and professional references. Your answers must be in your own words. Remember that your marker would have read all the reports and references before marking your assignment and can easily detect plagiarism, which will be dealt with severely including mark penalisation. Where direct quotes are used to support your answer, please provide in-text references to the report.  Please submit a softcopy of the assignment (in PDF) via Moodle by 4 PM, Monday, 25 May. We will use Turnitin to check the plagiarism percentage. Penalties will be applied for late submissions as outlined in your unit guide. Please indicate your name and ID clearly on top of each page. DO NOT include a coversheet for the softcopy submitted.  You must attach a Summary Table and follow the Table Format (Template Example) as suggested. No words count for these tables.  1,500 words in total (10% allowance, not including references).  12 font size, Times New Roman, 1.5 space.  The penalty for late lodgement is 10% per business day late with no assignment to be accepted five business days after the due date. 4 Marking Criteria  Comprehensive, detailed, and rich information and evidence are provided.  Reasonable and logical reasoning is provided.  Corroborative evidence is provided.  Adequate and robust analysis is conducted.  Communication and presentation are of high quality. Component Marks Comment Company’s and industry description /4.0 □ Audit risk and going- concern risk /5.0 □ Key audit matters /4.0 □ Planning materiality /4.0 □ Key accounts and key audit assertions /5.0 □ Communication and presentation /3.0 □ Final Mark /25 Marks 5 Template Example- Summary of Table Key Facts of XXX Company May include… Basic information and industry Major products and major competitors Business model Other important information. Evaluation of Audit Risk and Going-Concern Risk Inherent risk Control risk Detection risk Going-concern risk Key Audit Matters Key audit matter 1 Key audit matter 2 Planning Materiality Materiality basis Percentage applied Dollar amount of planning materiality Key Accounts and Key Assertions Key account 1 and its key audit assertion Key account 2 and its key audit assertion
Answered Same DayMay 15, 2021ACC3600Monash University

Answer To: 1 ACC/ACF3600 Auditing and Assurance – Semester 1, 2020 Audit Practice - Audit Risk Assessment (25%)...

Meenakshee answered on May 21 2021
147 Votes
SONIC HEALTHCARE LIMITED
1. Brief About Entity and Industry: Sonic Healthcare Limited is in Health-Medical Diagnostic Industry. In this industry, health care as well as social services via hospitals, doctors’ offices, surgery centers and Diagnosis facilities. In this industry, many health care’s cover an enormous not for profit ent
ities.
If we talk about Sonic Healthcare Limited which formed in 1987. Before being listed on Australian Securities Exchange, it grown from one pathology practice to today’s global medical diagnostic company, a well-known diagnostic company in the world. It is dedicated to help professional disease diagnostics. This is the one of the biggest medical lab operators in the world which is specialized in radiology and pathology testing services to hospitals and medical practitioners. It has grown due to strong organic growth and quality services provided by it. This company is having exceeding 500 pathologist specialist and around 200 radiologists. It operates from 8 countries such as Australia, Germany, USA, United Kingdom, Belgium, Switzerland, New Zealand and Ireland. It held biggest private pathology lab of United States, clinical pathology lab in addition to Bioscietia Healthcare of Europe. Sonic Healthcare works in very sustainable manner in all operations such as medical, finance, social and economic. It does not only work for money; it is focused towards to bring improvisation in healthcare and lives of people in the area where people are not much advantageous living as others. It also works for those projects which focus on women welfare, children.
2. Evaluation of Audit Risk: After being understood healthcare industry and Sonic Healthcare Limited working environment and nature of services provided by it, following risk can arise:
1. Inherent Risk: It is a risk of material misstatement which arise due to factors other than related with control risk. Level of inherent risk depends on nature and complexity of the entity. In case of Sonic Healthcare Limited, it may arise due to error made in financial statement in past, there may be chances that it may occur in future again. There may be chances of collusion among labor which may lead to fraud or error.
2. Control Risk: This risk arises due to absence of Internal control in the entity. Every organization set its internal control checklist to ensure where internal control is applied in the entity or not. Like all entities Sonic Healthcare Limited also maintains internal control checklist where it involves;
1. IT control policies framed and implemented or not.
2. Frequently Quality Check of devices or lab equipment used to diagnose samples
3. Adherence to applicable quality control standards in medical field
4. Policies regarding research and development done in laboratory
3. Detection Risk: It is the risk which could not be detected by auditor and which of great importance, whether individually or when aggregated. This basically depends on following factors such as;
1. Competency of Auditors- When auditor is less competent
2. Type of audit procedure- whether substantive procedure is performed or not
3. Sample size- Whether sample size is adequate enough to represent the whole of population
4. Review of Quality Control- Whether quality control review is made by outsider.
Evaluation of...
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